Gian Chand Jain v. Income Tax Officer

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ----- -Income Tax Appeal No. 52 of 2002Date of decision: 14.7.2010 Gian Chand Jain, Proprietor. M s/ . Jain Electric and HardwareStorePanchkula --- Appellant Versus Income Tax Officer --, Hry. Salary cum Coy, Ward, Chandigarh.--- Respondent --- CORAM: HON’BLE MR. HON’BLE MR . JUSTICE ADARSH KUMAR GOEL. JUSTICE AJAY KUMAR MITTAL --- PRESENT:Mr. Pankaj Jain, Advocatefor the appellant. Mr. Yogesh Putney, SeniorStanding-Counsel for the respondent Department. --- AJAY KUMAR MITTAL , .J TheassesseehasapproachedthisCourtunder-Section 260- A of the Income tax Act, 1961 ( in short “theAct’) and has prayed that the following substantial questionsof law arise in this appeal for the consideration of this Court,-fromtheorderoftheIncome taxAppellateTribunal,ChandigarhBench, Chandigarh (forshort “theTribunal”)-passedon 17.9.2001, inIncome taxAppealNo.1096/CHD/1994 for the assessment year 1992-93: 1-Whether under the facts and circumstances of thecaseITATwasjustifiedinlawbyupholding thesquared up accounts of Deepak Chadha for a loanofRs. 9,500/-, Pardeep Kumar Rs. 9,000/-,SomNathRs. 9,000/- andDarshan Singh Rs.6,000/- asincomefromundisclosed sources ofthe appellant only on the basis that the appellanthasnotproducedthembeforetheld. AssessingAuthority.caseITATwasjustifiedinlawbyupholding thesquared up accounts of Deepak Chadha for a loanofRs. 9,500/-, Pardeep Kumar Rs. 9,000/-,SomNathRs. 9,000/- andDarshan Singh Rs.6,000/- asincomefromundisclosed sources ofthe appellant only on the basis that the appellanthasnotproducedthembeforetheld. AssessingAuthority. 2-That on the facts and circumstances of the case,whetherITATwasjustifiedinlawbyinterpreting-theprovisionsofSection 68 oftheIncome TaxAct, 1961 inmaintainingtheadditionofRs.1,08,500/- on account of various unsecured loanas mentioned in the order against each person asassessee’s income from undisclosed sources ”. The assessee filed return for the assessment year 1992-93 declaring an income of Rs. 18,850/-. Theassessment, after scrutiny, under Section 143(3) of the Act,was finally concluded at an income of Rs. 2,56,010/-, videorder dated 24.2.1994. The assessing officer, amongst others,made addition in declared income on account of squared upaccount of Deepak Chadha, Pardeep Kumar, Som Nath andDarshanSingh. Besidesthis, anadditiononaccount ofunexplainedcashcreditonaccountofunsecuredloansamounting to Rs. 1,08,500/- was also made under Section68 oftheAct. Theassesseecarriedappeal before the-Commissioner of Income tax (Appeals) [(for short “CIT A ”( )] .Theappealwaspartlyallowed. Theassesseestill took up matterbeforetheTribunal. TheTribunalaswell, concurredwiththefindingsoftheauthoritiesbelowandconsequently--dismissed the assessee’s appeal, in so far as the challengeon the above count is concerned, vide order dated 17.9.2001.RegardingQuestion No.1. The issue that arises for consideration in this Court-is, whether the squared up cash credits in the names of fourpersons, namely, Deepak Chadha, Pardeep Kumar, Som NathandDarshanSingh, amountingto Rs. 9,500/-, 9,000/-,9,000/- and 6,000/- respectivelywere to be treated asgenuine and could not form partofthe assessee’s incomefromundisclosedsources. Theassessingofficer, whileconsidering the genuineness of the above amounts, observedthattheassesseehadnotproducedthesaidpersons toprovethegenuinenessoftheunsecuredloansandconsequentlyaddedtheaforesaidfouramounts, . . i etotalamountofRs. 33,500/- totheincome of the assessee.-The appellant assessee contended before the CIT A( ) that nosufficient opportunity was provided to it to produce aforesaidfourpersonsforverificationand, thus, theadditionof -squared upaccountsandunsecuredloanstreatedasunexplained cash credits was not justified. The CIT A( ), whileupholdingthefindingoftheassessingofficer, recorded as under: -squared upaccountsandunsecuredloanstreatedasunexplained cash credits was not justified. The CIT A( ), whileupholdingthefindingoftheassessingofficer, recorded as under: “2.4. Ihavecarefullyexaminedtherivalsubmissions. Afterexaminationoftheassessmentrecords maintained by the AO, I find that the factsstated by the appellant are not correct. In fact thefactsstatedbytheAOinpara-2 ofhisassessment order are correct. On 23.12.1993, theappellant had categorically stated before the AO asunder: “ShriDeepakChadhaandShriPardeepKumar are not traceable and, therefore, cannot beproduced. Asregards, ShriJarnailSinghandSuman Jain seek time to produce ”.Againon 4.1.1994 ShriG C. . Jain, himself alongwith his counsel stated before the AO as under:“thatfollowingpersonsarenottraceableand,therefore, cannot be produced: iSh . Som Nath iiSh . Darshan Singh” 2.5 Therefore, alltheabovesaid 4 creditorswere never produced by the appellant and in facthehadcategoricallystatedthattheywereuntraceable. Whenasperassessee’sownadmission these creditors were untraceable, it wasnot just possible to give their latest addresses andnosuchaddresseswereevergivenbytheappellanttotheAO. Therefore, Ihavenohesitation in holding that the appellant had neitherprovedtheidentitynorthecapacityofthesecreditors nor the factum of actual passing of cashwas proved. The AOhad correctlyinvolved theprovisions of section 68 and added this amount ofRs. 33,500/- to the income of the appellant. Thisaddition is , therefore, upheld ”. Theabovefindingwasaffirmedby theTribunal in the appeal preferred by the assessee. Learnedcounsel for the assessee has now sought to challenge the -saidfindingonthegroundthatthenon production of theabove four persons could not be a ground for treating theincome to be from undisclosed sources of the assessee. Inour view, the contention does not carry any weight. This isa finding of fact recorded by the authorities below that thecash credits were not genuine and it was to be treated asincome of the assessee from undisclosed sources. Once theassessee was unable to produce those persons from whomhehadshowntheabovesquaredupcashcredits, theinference drawn by the authorities below cannot be said to beperverse. Regarding Question No .2. Now adverting to the second question, whether theassessing officer was right in treating the unsecured loan tovarious persons as unexplained cash credits under Section 68of the Act? The Tribunal, while upholding the finding of theCIT ( ) Ain this regard, recorded as under:- “ I have gone through the submissions advanced on behalf of the assessee. It is strange that most ofthe creditors have given loans of Rs. 19,000/- to the assessee. This obviously has been done tohoodwinktheprovisionsofsection 269SSof-Income taxActwhichprohibitsreceiptofcashdeposit of Rs. 20,000/- or more. The A O . . andonappeal, theCIT A( ) haveheldthatthesecreditors had no capacity to advance loans to theassessee. This conclusion has been reached afterexaminingsourceofincomeofthecreditors andtheir family status. In reaching the above conclusionall relevant and material facts have been taken intoaccount. I have nothing before me to take a viewcontrary to the one taken by the lower authorities.Therefore, these cash credits cannot be treated asprovidedinaccordancewithlaw. TheRevenueauthorities were justified in treating cash credits asassessee’sincomefromundisclosedsources. Inthesameway, theywerefullyjustified in notaccepting addition of Rs. 14,000/- to the capitalaccount of the assessee as genuine. The amountwasintroducedfromanundisclosedsource and was rightly added to the income of the assessee.Thus, additionsreferredtoabove, wererightlymade by the A O . . and confirmed by the CIT A( ). Iagree with them and uphold their orders on thesecredits ”. The above again being a finding of fact was rightly added to the income of the assessee.Thus, additionsreferredtoabove, wererightlymade by the A O . . and confirmed by the CIT A( ). Iagree with them and uphold their orders on thesecredits ”. The above again being a finding of fact against which no misreading could be shown, no interferenceis called for by this Court. Learned counsel for the appellant-made an unsuccessful attempt to persuade this Court to reappreciate the evidence and record a finding in favour of theassessee. We are not inclined to accede to the submission-madebythecounsel. Re appraisalofevidence, withoutreference to any material which had been misread, does notfall within the domain of Section 260- A of the Act. No substantial question of law arises in this appealfor consideration of this Court and the appeal is, therefore,,dismissed. , therefore,, (AJAY KUMAR MITTAL)JUDGE GOEL)July 14, 2010*rkmalik* (ADARSH KUMAR JUDGE